The role of performance measures and incentive systems in relation to the degree of JIT implementation

Abstract

The shift to world-class manufacturing strategies has necessitated complementary changes in management accounting systems (MAS). Using survey data obtained from top manufacturing executives at 253 US firms, this study empirically examines the relationship between the level of just-in-time (JIT) practices implemented by US manufacturing firms and the performance measures and incentive systems that are incorporated in their MAS. The statistical tests provide empirical evidence that the use of non-traditional performance measures such as bottom-up measures, product quality, and vendor quality, as well as incentive systems of employee empowerment and compensation rewards for quality production are related to the degree of JIT practices implemented.